On Friday, the large-caps made a small gap down while the QQQ made a small gap up at the open. However, all 3 major indices then immediately sold off for most of the day. A strong rally the last 20 minutes (perhaps on S&P 500 rebalancing or on Quadruple-witching preparation) still left all 3 with ugly black candles, but at least well up off the lows. (In other words, all 3 indices were black Hammer-type candles with longer lower wicks.) On the day, the SPY lost 0.82%, the DIA lost 0.52%, and QQQ lost 0.30%. The VXX rose almost 2% to 17.08 and T2122 fell just out of the overbought territory to 76.74. 10-year bond yields rose to 0.945% and Oil (WTI) rose to $49.10/barrel.
The weekend drama was about a stimulus and government spending deal as Friday ended with a government shutdown expected and no stimulus deal yet done. Late Friday night Congress kicked the can down the road by passing a 2-day stop-gap spending bill that ended at Midnight on Sunday night. The hold-up on the stimulus deal was down to a few GOP Senators who want to end the Fed’s Lending Authority (kill the programs where the FOMC has been lending to businesses and banks as well as buying bonds after emergency previous Congressional authorization). Late Sunday the two sides finally reached a deal, but Congress didn’t have time to type up and pass that agreement before the shutdown deadline. So, they passed an additional one-day stop-gap spending bill last night that the President signed to keep the doors open.
The other major news from the weekend was that Friday evening the FDA approval of the MRNA vaccine. This announcement was made at the same press conference where the White House Vaccine Chief admitted communications problems had caused 14 states to believe they were getting up to 40% more of the PFE vaccine doses than they had actually been allocated. So, the MRNA vaccine shipping may help fill some holes. The MRNA vaccine began shipping on Sunday and the first vaccinations with this drug should happen Monday. The main advantage of the MRNA vaccine is that it requires slightly less stringent (still -50 degrees) temperatures to store and ship, making its distribution easier. The CDC followed the FDA lead Sunday by authorizing hospitals to administer the new vaccine.
Related to the virus itself, US infections continue to rage across the US, but came down just a bit. The totals have risen to 18,267,579 confirmed cases and 324,869 deaths. As mentioned, the weekend saw a small reduction in new cases, but the 7-day daily average remains 217,630 (over one-third of the world's cases) and the average number of deaths rose to 2,628 deaths per day. The apparent new threat (new strain) out of UK caused the US Surgeon General to a statement Sunday. He said it is too early to tell if the new strain of the virus would be prevented by the two current vaccines, but other vaccine candidates are on the way in the months to come...so we should trust the scientists.
Globally, the numbers rose to 77,264,853 confirmed cases and the confirmed deaths are now at 1,701,599 deaths. As a reference, the world is averaging about 640,000 new cases and almost 11,000 new deaths per day. In the UK, London was placed under emergency lockdown and PM Johnson says that the Christmas pause in restrictions will be modified as the Health Minister explained that the new virus strain (mutation) is out of control and spreading far worse than the original strain. This news caused the reimposition of restrictions on travelers from the UK in many countries as the US, Denmark, the Netherlands, and even Australia have now detected cases of this new variant. This includes a full stop of travel from the UK to France. In more positive news for Europe, the EU Drug Regulator is expected to authorize the PFE/BNTX vaccine today.
Overnight, Asian markets were very mixed. China was green as Shenzhen (+1.87%), Taiwan (+0.95%), and Shanghai (+0.76%) led the gainers. However, most Asian exchanges were red with Thailand (-5.44%) and India (-3.14%) far outpacing the pack. In Europe, markets are red across the board on massive fear stoked by the new virus strain in the UK. Losses have been in the 2%-3% range as of mid-day. Among the big 3 bourses, FTSE is at -2.03%, DAX at -2.84%, and CAC at -2.63%. As of 7:30 am, US futures are pointing to a significant gap lower. Right now the DIA is implying a -1.38% open, the SPY implying a -1.55% open, and the QQQ implying a -0.99% open.
There is no major economic news or major earnings reports for Monday.
With no economic data or earnings to change the storyline, markets are being dragged South by the new strain of virus in the UK. Expect the details of the stimulus agreement to also get some traction, but its a question of whether Mr. Market focuses on what didn't make the deal or what did. At least at the start, the Bears have the upper hand. The new MRNA vaccine is the wildcard, but remember PFE sold off in the days after the approval and release of their vaccine. So, be careful and remember this is a holiday-shortened week with light volume expected. It remains very possible that all the big money has already left town for Christmas vacation.
Focus on maintaining discipline. Respect the trend, support and resistance, and price action. Keep working the process and booking those base hits. Don't let greed get in the way of you achieving goals. Success is built one trade at a time, not by trying to hit the lottery. In short, get rich slowly...one trade at a time, just consistently achieving goals.
Swing Trade Ideas for your consideration and watchlist: No Trade Ideas for Monday. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
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🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
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